Manulife Investments is expanding its line of products by providing a new income mutual fund that will blend Canadian stocks with large U.S. bond exposure across multiple sectors.
Manulife announced both the mutual fund bundled product as well as a new private pool investment product this week. The bundle provides access to two other funds: a 60 per cent exposure to Manulife Dividend Income Fund and 40 per cent exposure to Manulife Strategic Income Fund. Manulife says the two funds provide exposure to both Canadian equities and global multi-sector fixed income.
"Strategically designed to give exposure to two of Manulife Investments' most prominent portfolio management teams in one fund, the Bundle solution gives investors who are looking for a balanced approach, an excellent solution," Derek Saliba, assistant vice president of Manulife Investments, said in a statement.
The dividend bundle will consist of 41 per cent Canadian equities, 35 per cent U.S. equities and bonds, 7 per cent developed non-North American bonds, 4 per cent each for emerging markets bonds and convertible bonds, and 8 per cent in cash. The target management expense ratio (MER) is 2.3 per cent for the adviser series. As of May 31, top holdings include Loblaw Companies Ltd., Brookfield Property Partners LP and Fortis Inc.
"Many investors and advisers find appeal in being able to make one (fund) purchase rather than two or more," said Dan Hallett, a principal at HighView Financial Group, an Oakville, Ont.-based investment counselling firm. "In this case there is a slight fee premium for the 'bundle' but it's small enough that it won't deter most people that are otherwise interested in Manulife's offerings in dividend stocks and global bonds." Mr. Hallett adds that this fund model began to grow in interest in the early 2000s.
While the fund's appeal is in its flexibility and breadth, it's not the first to provide broad exposure. "It's true that most balanced funds have Canadian-dominated bond components, but this is by no means the only one with a focus on non-Canadian bonds," Mr. Hallett said.
The CI Signature High Income fund has some similarities to the Manulife bundle. The CI fund has a mix of both Canadian and global stocks and Canadian and non-Canadian bonds, while having an MER of 1.6 per cent, according to Mr. Hallett.
Other similar funds include CI Signature Diversified Yield, Purpose Monthly Income, and BMO Balanced ETF Portfolio.
The Manulife Canadian Growth and Income Private Trust is the new investment pool product that Manulife says is intended to provide a balanced solution for "mass-affluent" investors. Manulife approximates the fund to consist of about 60 per cent Canadian equities and bonds, 33 per cent U.S. equities and bonds, two per cent in developed non-North American bonds, one per cent in emerging markets bonds, and four per cent in cash. The target MER varies, with the advisor series being 2.02 per cent. Top holdings include Canada 1.5 per cent March 2020 bonds and New Zealand 6 per cent May 2021 and 6 per cent December 2017.
Manulife created the private pool investment – with different variations available at other banks – two and a half years ago. Private pools offers fee breaks, but "legally they're no different than regular mutual funds that are branded as products for the wealthy," Mr. Hallett said. Other investment pools can be found at Invesco, Dynamic, Fidelity, and Russell.